Freelancers Union Cashes In On Obamacare

A New York bill that exempts the Freelancers Union in the state from some of the Affordable Care Act’s taxes and mandates has angered a broad coalition of business groups, consumer advocates, and insurers who say the exemption is unfair and counterproductive to the success of the state’s insurance exchange.

The group, which sells low-cost and low-coverage health insurance to some 25,000 workers, has been operating under a demonstration program since 2009 that exempted the plans from the state’s extensive mandates. This allowed the union to sell plans to its members at much lower cost than the average plan on the individual market. The latest bill, which passed both the Senate and the Assembly, would extend the demonstration until the end of 2014, getting plans sold by the Freelancers Union out of Obamacare’s more expensive provisions for an extra year.

Without the bill, members could see sharp increases in premiums and “jeopardize [the Freelancers Union’s] ability to offer continuing coverage to its members,” the union wrote to lawmakers in a memo of support last month.

To add insult to injury, some of the bill’s opponents say, the Freelancers Union has received $340 million in funding from the federal health law to set up insurance plans, called “co-ops,” in three states. House Republicans, like Ways and Means chairman Dave Camp and Oversight Chairman Darrell Issa, have criticized that funding.

That a group supportive of the health care law, and one that indeed is receiving funding from the law, is actively working to exempt its own members from some provisions of the law appears to validate many of the law’s critics who charge Obamacare’s implementation will lead to major disruptions and changes in coverage for millions of Americans.

Jackie Kessel, a spokeswoman for the Freelancers Union, said that the co-ops that received the ACA funding “are separate from the Freelancers Union,” and the group will establish the co-ops as separate entities.

“They are incorporated and licensed as wholly independent entities in their respective states, have experienced health insurance leaders, and independent, consumer-directed boards,” she said.

Kessel defended the demonstration’s extension, arguing that freelancers are a unique group of workers with incomes too high to qualify for tax subsidies on the exchange.

“This extra year is important, since an estimated 80% of FU health plan enrollees will not be eligible for subsidies to purchase insurance on the exchanges or will receive the minimum amount available — likely putting affordable coverage out of reach,” Kessell said.

New York’s insurance lobby, the Real Estate Board of New York, and the National Federation of Independent Business, have all also opposed the legislation, arguing the exemptions made for the Freelancers Union will unfairly move extra costs to small groups and individuals who have to fully comply with the law.

“If the legislature were to adopt this type of legislation, then it would only be fair to extend the same right to other associations, chambers of commerce, and small business organizations,” wrote the New York Health Plan Association in a memo of opposition.

Consumer advocates oppose the bill too, but for different reasons. They say taking the healthier workers out of the insurance pools will increase costs for sicker people looking to buy insurance on the individual market. Having healthier, working individuals like freelancers would help bring down the overall cost of insurance in the exchange.

“Here we have finally come to the promised land where we have a mandate for everyone to be in the market, which means you are going to have healthier people cross-subsidizing the sick people, and we see the beginning of a loophole which is being created right away by the Freelancers,” said Mark Scherzer, a lawyer representing a coalition of consumer advocacy groups for people with disabilities. “It’s a very dangerous precedent. … If history is any guide, this is a foot in the door to the next request, to the next exemption.”

The bill has not yet been sent to Gov. Andrew Cuomo, and his spokesman Matt Wing said the governor has not yet taken a position on the bill, though groups on both sides of the argument expect him to sign it. The Department of Health and Human Services will have to approve the waiver for the Freelancer’s Union plans if Cuomo signs off on the bill.

The provision for the Freelancers Union sunsets at the end of 2014, and the bill’s sponsor in the state senate, Republican Sen. Kemp Hannon, said he doesn’t expect it to be extended.

“I think that the New York metropolitan area has a valuable set of resources in freelancers, whatever their skill may be,” he said. “I think that’s a pretty unique segment of the New York population, and whatever we can do to encourage them, we should.”

Whatever the good intentions may be, opponents of the bill say the Freelancers Union has shown themselves to be hypocrites.

“It is extremely hypocritical for an organization to take hundreds of millions of dollars in federal ACA grants while at the same time trying to exempt their own members from the reform law’s most onerous regulations and taxes,” said one insurance industry official.